How to claim a VAT refund: A simple guide for UK businesses

Special cases and partial claims

Dual-purpose expenses (used both personally and for business) can be partly claimed. For instance, if your home office makes up 10% of your house, you can only reclaim 10% of VAT on related utilities—just make sure you keep the calculations.

Partial exemptions apply if you sell both VATable and exempt goods/services. You’ll only get VAT back on the taxable parts of your business.

If you’ve recently registered for VAT, you can also reclaim VAT on goods purchased within the last four years and services within six months, provided they’re still used by the business.

If you’ve bought high-value items like machinery or commercial property, the Capital Goods Scheme allows you to reclaim VAT gradually over several years.

Are non-UK businesses eligible for a VAT refund?

Non-UK businesses can also claim a refund under the VAT Refund Scheme. Your business must:

• Be registered for VAT in its home country
• Have no UK office or property
• Must not be registered, liable, or eligible to register for UK VAT, and must have no UK establishment.

What can you claim?

Most business-related purchases during your UK visit, including:

• Hotel stays and meals for staff
• Trade fair or exhibition fees
• Travel and transport within the UK

What’s not covered?

You can’t claim for:

• Most cars are blocked, except those used exclusively for business purposes or short-term hire for business use
• You cannot reclaim VAT on goods bought for resale in the UK or goods used to make UK supplies.
• Client gifts or entertainment

If you import tools or materials for a UK event or trade fair, you may be charged VAT at customs. Since these aren’t being sold, you can reclaim that VAT under the Refund Scheme

Step-by-step: Reclaiming VAT for UK businesses

Here’s a quick checklist to guide your VAT refund application:

Step 1: Confirm you are VAT registered

You can only reclaim input VAT if the business is VAT registered in the UK. If not registered, register first or you cannot claim current returns.

Step 2: Keep digital VAT records in MTD-compatible software

Maintain digital records and prepare your VAT Return using software that is compatible with Making Tax Digital; HMRC no longer accepts returns via the old online account except for specific exemptions.

Step 3: Collect valid VAT evidence

Hold valid VAT invoices and proof that each purchase is for business use; keep calculations for any business-only apportionment.

Step 4: Identify what you can and cannot reclaim

Exclude blocked items such as client entertainment, most margin-scheme purchases, and costs linked to exempt supplies; apply partial exemption where relevant.

Step 5: Account for vehicles and fuel correctly

Apply the car and fuel rules; for mixed-use fuel either reclaim all VAT and apply the fuel scale charge, or claim only business-use fuel with mileage records.

Step 6: Include pre-registration VAT where eligible

If newly registered, you can reclaim VAT on goods bought within 4 years that you still hold or used to make goods you still hold, and on services within 6 months.

Step 7: Prepare the VAT Return in your software

Compile sales, purchases, and the recoverable input VAT based on the rules above; the MTD-compatible software will create the return in the required digital format.

Step 8: Submit the VAT Return via MTD software

Transmit the return digitally; do not submit through your online HMRC account unless HMRC has agreed an exemption from MTD.

Step 9: Receive the repayment

HMRC usually makes VAT repayments within about 30 days of receiving your return; ensure your repayment bank details are correct.

Step 10: Retain records and respond to checks

Keep invoices and working papers; HMRC can query claims and may require evidence for business use and apportionments.

Step-by-step: Reclaiming VAT for overseas businesses (VAT Notice 732A)

Step 1: Check you meet the scheme’s eligibility

You must be established outside the UK, not registered, liable or eligible to register for UK VAT, have no UK establishment, and make no UK supplies other than the specific exceptions in the notice.

For full details of exemption, check HMRC’s official guidance.

Step 2: Confirm the claim period

The prescribed year runs from 1 July to 30 June.

Step 3: Gather documents

Prepare form VAT65A, an original certificate of status from your home tax authority, and all invoices and import VAT evidence.

Certificate of status must be renewed annually.

Step 4: Choose submission method and register for SDES if using it

You can submit electronically via HMRC’s Secure Data Exchange Service; request SDES access in time and follow ORU instructions.

Step 5: Check minimum claim values

Minimum is £130 for periods of at least 3 months within the year; £16 for a full-year claim or the remainder of the year.

Step 6: Identify eligible and blocked costs

You cannot reclaim VAT on supplies used to make UK supplies, most ordinary business cars, certain second-hand margin-scheme goods, and most business entertainment; limited car and transport exceptions apply.

Step 7: Submit by the deadline

File your claim by 31 December following the end of the prescribed year.

Step 8: Keep originals and monitor progress

Retain original documents; if you do not hear within 6 months, contact the Overseas Repayment Unit with your SDES receipt.

Step 9: If refused, seek a review or appeal

You can ask HMRC for a review and then appeal to the tribunal within the stated time limits.